RSB Vineyards, LLC v. Orsi
Facts: A property owner hires a contractor to renovate a property. Unknown to the owner, the renovation leaves the property structurally unsound. The owner later sells the property to a buyer. After the sale, the buyer learns the building is structurally unsound and is forced to demolish it.
Claim: The buyer seeks money losses from the owner, claiming the owner breached the implied warranty of habitability since they failed to disclose material defects likely known by their contractor and imputed to the owner in the contractor’s capacity as their agent.
Counterclaim: The owner claims they were unaware of the defects and are not liable for knowledge of the defects since their contractor was not acting in the capacity of an agent and, thus, the contractor’s liability to detect the structural defects is not imputable to the owner.
Holding: A California court of appeals holds the owner is not responsible for nondisclosure of material defects since the owner had no knowledge of the defects and the contractor’s liability to detect these defects is not imputable to the owner as the contractor was not acting in the capacity of an agent. [RSB Vineyards, LLC v. Orsi (September 29, 2017)_CA5th_]
Editor’s note — Properties are sold “as-disclosed,” never “as-is.” The owner would have disclosed any known material defects in a Transfer Disclosure Statement (TDS). See the TDS form published by RPI (Realty Publications, Inc.). [See RPI Form 304]